When it came to financial advice, father knew best

HenryK. Hebeler

Henry (Bud) Hebeler retired from The Boeing Company in 1989 where he was
vice-president for corporate strategic and operational planning. Before that he
was president of The Boeing Aerospace Company, a division which did all of
Boeing’s space work and most of the military products. He now helps people with
retirement planning personally and with articles and programs on
Analyze Now, a site often referenced
by The Wall Street Journal and many financial publications. He has three degrees
from MIT, has been on advisory committees to the U.S. Congress, Departments of
Interior, Commerce, Energy, and Defense, an economic advisor to the Washington
State governor, a member of Washington's Economic Development Council and a
member of several university boards.

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My father was a son of a labor union organizer in New Jersey. After hearing from his father about how bad it was that all of those capitalists made so much money at the expense of the worker, it didn't take him long to figure out that it might be better to be a capitalist than a factory worker.

So he wrote to a number of major city Chambers of Commerce to find out what kind of business they thought they might need. St. Louis responded by suggesting a shoe lace factory because there were already a number of shoe factories there. As a kid, I remembered the description of St. Louis: First in shoes, first in booze, and last in the American League. (All true.)

So he and his brother moved to a rooming house in St. Louis and started a very modest shoelace factory from scratch with very little money. It was a formidable task to start a new business during the Great Depression. Nevertheless, the company grew to produce about one-half of the shoelaces in the U.S. and practically all of the Army's laces in World War II.

I took my father's financial advice very seriously because I felt that he was a very wise man and was admired by all his peers and factory workers. His major financial advice was to always save 10% of my paychecks for retirement. And, he said, "If a year comes when you can't do that, save your next raise and get back to saving 10% again." Later in life I learned I had to save more than that, so when I could, I did. My father's stress on savings was probably the best financial advice I ever got. I think that he would probably have said 15% if he were living today because so few people other than government employees get a pension.

He had another valuable piece of advice that was more controversial, but served me well. That was, "Don't invest in anything that eats or takes maintenance." I was sorely tempted to ignore that advice on one occasion. A friend and very successful person in real estate development wanted me to invest in a catfish fish farm. He had done a lot of market research and had a very impressive business plan. I was sorely tempted, but decided on the basis of my father's advice to say, "No." That one word sentence was hard to say to a friend, but it saved me a bundle. The fish farm only lasted a short while before it failed without ever giving back a penny of the original investment much less any earnings on it. I had several similar experiences with investments that required maintenance, but that will require another article.

That said, my father wasn't always right about investments. After he had some money, he tried to pick winning stocks without a great deal of success. More devastating was the outcome of his fixed-income investments. He didn't understand the power of inflation which compounds, just like investments are supposed to do. There were no personal computers in those days to help him out, and he didn't have the math background to analyze the effects of inflation himself. Inflation rates of that reached 13% a year during the Carter administration were devastating to his fixed-income investments.

Not having the analytic capability of doing a long-term projection wasn't the only problem. He lived to age 96 which would have required any 10% saver in better years to really stretch any retirement savings with serious spending cuts. He downsized three times to get some extra money, but even that didn't provide income for his long life. So we had to help provide support which we willingly did — even to support his love of golf. He golfed till he was 95 and only stopped after my sister correctly took away the keys to his car after he announced that he got his driver's license renewed for three more years — after the third attempt.

Even though he didn't have the tools to make good financial forecasts, he always thought long-term when it came to financial decisions. For example, he taught me the long-term differences between buying something now on credit versus waiting to buy until savings were sufficient. He well knew it was better to earn interest than to have to pay interest because debt interest was almost always at a higher rate than investment interest. Long-term thinking was essential in my six years as Boeing's vice president reporting to the chairman and board for company planning, forecasting and budgets for research, development and acquisitions.

Another financial heritage my father left me with was to always do more work than expected. He certainly had to do that to be successful in the Great Depression and beyond. He set a good example for me as I went to work with him in the summers between my high school years and watched him bring home paper work to do as well. He also wanted me to learn to earn more than his own father in a union job, and so gave me a good taste of factory work when, in one summer, he had me work on a tipping machine. I stood for eight hours a day and made sure that none of the laces had flaws as they came at a fast and continuous pace off the machine. He had me do the most difficult of these which was to watch the fast moving parade of black laces, the worst color to inspect. Imagine staring at a black picture all day seeking a flaw that appeared for only a moment of two.

I am sure my father's examples helped me in my growth after I went to work at Boeing. The tough thing about this though was that work took time away from family. I readily stayed late and likely did more than expected. That was an element that led to promotions and financial awards. In retrospect, I should have compromised the work somewhat and devoted more time to family. On the other hand, now I can afford to do more for my children and grandchildren than I likely could have done with just a forty-hour week.

Unlike many others, my father was very lucky that neither he nor my mother required long-term-care. I believe that was because they ate carefully and exercised regularly for most of their lives. That too was a kind of financial lesson I found subsequently, because long-term-care is incredibly expensive.

Sometimes we have to learn from other people's problems, and so I learned from Dad's financial problems late in life as well as from the good advice he gave as a young business person. In fact, Dad's lack of the capability to make a long-term analytic financial projection was likely one of my motivating factors to retire and try and to help people do a better job of planning, saving and investing. It's really too bad that people prefer to play games with their phones, iPads and computers rather than take advantage of the powerful financial tools now available on the Internet.

Their future penalties will be painful as they learn financial lessons the hard way — as did my father late in his life as he exhausted his savings.

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